Last week I was interviewed on the Americhicks radio program and I talked about my fathers military experience on Hokkaido where he chased down Japanese World War II army veterans who were engaged in a loose insurgency against the American occupation of Japan. I was asked in the interview “How did they catch these guys?” to which the answer was with the help of the Japanese government. The Japanese government understood the choices were not occupation by the United States or no occupation at all. The choices the Japanese faced were occupation by the United States or occupation by the Soviet Union. The Japanese understood that occupation by the United States was far superior to occupation by the USSR.
The Japanese government understood the real choice before them.
Today in the United States most people are arguing over the appropriate level of welfare state. Donald Trump has tweeted that the country should spend much more money on healthcare. Ivanka Trump has said that family leave should be mandatory and President Trump has included family leave in his budget. Obama, Clinton, Sanders, Warren and company desire cradle to grave government care – paternalism for everyone!
Puerto Rico has recently discovered, and Illinois is in the process of discovering, that deciding on the appropriate level of welfare state is not the choice. The choice we will have to make is whether we voluntarily dismantle the welfare state or allow the welfare state to collapse.
It would seem that everyone is aware that the Federal debt is about $20trillion. However – that is the official ‘on the books’ debt. The Congressional Budget Office estimates the actual amount that the Federal government is on the hook to pay as $210trillion – or more than ten times what the Federal government actually counts as ‘the debt.’
How did we find ourselves in such an absurd situation? Here is how: when Lyndon Johnson was President he attempted to launch the Great Society concurrent with fighting a very expensive war in Viet Nam. This ballooned the Federal debt and LBJ, looking to a re-election campaign that never occurred, ordered the Federal government to abandon Generally Acceptable Accounting Principles. In a nutshell, LBJ directed the Federal government to only count debt that LBJ found politically expedient to report. Problem fixed, right?
Not hardly. By publicly reporting only a portion of the debt it has provided congress and subsequent Presidents political cover to spend money and buy votes via deception. The deception has allowed the American voters to believe that they have choices available that they do not actually have – certainly not indefinitely. I am unaware of anyone not named Krugman who believes the United States will honor that $210trillion debt. The debt is not mathematically possible to pay without monetizing, i.e. printing money to pay the bills. Yet the impossibility of paying this debt never prevents us from pretending that it does not exist.
There is a logical mathematical outcome that usurps pretending. Puerto Rico and very soon Illinois will have attained an understanding of this logical mathematical outcome. Others will follow quickly.
The actual choice before us is if we will voluntarily dismantle the welfare state or allow it to collapse. If we choose to voluntarily dismantle the welfare state we can strive for some level of fairness in doing so. If we choose to continue pretending until the welfare state collapses it will only be fair in terms of the absoluteness of the misery and destruction. Amazingly enough those who plan to continue pretending right up until collapse have appropriated the terms ‘fair’ and ‘compassionate’ for themselves.
Still not at peak absurdity.